‘The good old days when Facebook was merely breaking privacy and elections are now gone – and we’ll surely miss them.’
Photograph: Marcio José Sánchez/AP

What should we make of Facebook’s sudden foray into the world of digital money? Just as regulators were beginning to wake up from their self-induced coma to discover that Facebook has grown too fast and too big for its own good, the company has decided to redouble its unbending commitment to “moving fast and breaking things”. The good old days when Facebook was merely breaking privacy and elections are now gone – and we’ll surely miss them. But how could they compete with the chance of breaking – once and for all – the global financial system?

To that end, Facebook has announced Libra, a currency, an infrastructure, a network – an ambiguous digital entity capacious enough to be everything for everybody, and with the noble cover of a .org domain to boot. It’s the ultimate Schrodinger’s cat of the digital economy: a blockchain/non-blockchain, it will serve as money/non-money to save/bury Facebook/all of us.

The specifics of how this amorphous project will operate are somewhat scarce but one can still discern its overall aspiration. It would enable users, especially those who are unfortunate enough to lack a bank account but fortunate enough to have a Facebook account, to convert real money into Libras, to deposit it virtually, to send it to others or to simply use it to pay for services.

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Facebook is framing the venture as humanitarianism: Libra is here to help the world bank, not strip the world of its remaining assets. Thus, for every Uber and Mastercard that have joined Libra’s association as partners (at the “small” cost of $10m per company – apparently, the era of “free” online stuff is over too), there are also not-for-profit groups like Mercy Corps and Women’s World Banking that lend today’s financial and digital capitalism a humane, even smiley face. Without this not-for-profit contingent, the Libra Association would look more like an innovation-friendly crime syndicate – just look at the total number of recent court cases involving Uber, Mastercard, and Facebook alone.

It’s tempting to misread Facebook’s move into finance as yet more proof of its infinite chutzpah and shortsighted arrogance. Is Libra just a clever way of spitting into the face of angry regulators? Where does Facebook find the courage to proclaim that it’s going to work with policymakers in order to “shape the regulatory environment” in a way that is conducive to its needs? No sane regulator would like to be seen to be shaped by anyone in Facebook’s orbit.

Facebook, however, is no novice to controversy and is probably less naïve than the Libra manifesto might suggest. Sheryl Sandberg, CEO Mark Zuckerberg’s second-in-command, is very familiar with the world of finance, having spent her early career at the US treasury under Larry Summers. Could it be that Zuckerberg actually has a plan?

Facebook is following a risky but rational two-pronged strategy. First, the company badly needs to diversify its business away from advertising. Second, it wants to pre-empt, as much as possible, some of the tougher regulatory measures that are likely to surface as the US presidential campaign goes into full swing later this year.

The diversification bit is straightforward: Facebook’s Chinese competitors have already shown that payments and communications go together and produce a very profitable mix. Besides, the world’s unbanked won’t stay so forever; as things stand now, they are most likely to be served by China’s tech giants, as Beijing expands the digital components of its One Belt, One Road global strategy. Without a strong presence in payment services, Facebook would not be able to take on Tencent or Alibaba in foreign markets.

On the other hand, by taking on Chinese competitors directly, Facebook stands to curry favor with Donald Trump: a Facebook that is aggressively trying to undermine the global expansion of Chinese firms is a more important strategic asset to Washington than the pacifist Facebook of yesteryear. For the moment, a further intensification of the tech cold war is only good news for Facebook, as such heated rhetoric (and practice) would paralyze Washington’s efforts to break it up.

But there’s another rationale to Facebook’s actions. As it prepares for the public battle over its future, the company seems to have grasped that its best weapon is to mobilize the exact kind of populism that has already allowed other Silicon Valley giants – especially Uber and Airbnb – to rally their users behind their anti-regulation campaigns.

By positioning their firm as a rebel force against mediocre bureaucrats and sluggish corporate incumbents, Facebook’s strategists seek to convince the public that their company, an emancipatory force of universal disruption, is a victim of global conspiracy by crony politicians and lazy competitors. Given the boundless public animosity to banks and their regulators – topped only by animosity toward telecom firms – such arguments might even sound persuasive.

With the launch of Libra, Facebook might also be acknowledging, however subtly, that its business model will be changing soon. Remarkably, it has already quietly embraced the idea – once anathema in big tech circles – that user data is a commodity with a price tag on top. Thus, it has recently launched an app that pays users in order to collect data about how they interact with the services and apps of its competitors. But what about the value of data that users generate while they use Facebook itself?

Facebook’s long-term bet could very well be that a digital economy where data and digital services are completely commodified might be as profitable as the one where the imperatives of advertising help to keep that data non-commodified. Yes, Facebook would need to pay something to its users – but, in turn, it would also be able to charge them for its services. As long as all such transactions are conducted in a currency under its implicit control– and if Facebook succeeds in convincing its users that their data, on its own, has far less value than the services it supplies – it would not necessarily be such a bad outcome for the company. In fact, it’s almost certainly better than the prospect of slicing up the company into smaller pieces on antitrust grounds.

If Facebook is prepared to embrace such a seemingly radical shift to payments and subscriptions, it would disarm many of its critics, who have been insisting that the reason to fear Facebook is precisely because it’s too addicted to advertising and cannot embrace other models. But would a different Facebook – a champion of digital currencies – look any less threatening?

Perhaps Facebook’s critics have misunderstood the nature of the threat. Facebook, along with Amazon, Alphabet, and a few others, present a problem that is fundamentally different from those of other industries.

As long as they traffic in data – and as long as data remains the lifeblood of democracy and economy alike – these firms will exercise disproportionate and undue influence over decisions that ought to be decided in parliaments, not in marketplaces. Whether they get to exercise it by extracting our data and showing us ads or by buying our data and selling us their services is not so important. A business model, however profitable, is never a sound foundation for robust democracy. For that, we have constitutions.